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The Issue:
Whether or not the CEZA is bound by the mistake or negligence of its
then counsel, Atty. Baniaga, thus lost its right to appeal the RTC
judgment.
The Ruling:
The Court finds the petition meritorious.
Relief from judgment is a remedy provided by law to any person against
whom a decision or order is entered through fraud, accident, mistake, or
excusable negligence.1 This remedy is equitable in character, allowed
only in exceptional cases where there is no other available or adequate
remedy provided by law or the rules.2 Generally, relief will not be granted
to a party who seeks avoidance from the effects of the judgment when
the loss of the remedy at law was due to the negligence of his
counsel3 because of the time-honored principle that clients are bound by
the mistakes and negligence of their counsel.4
The notices sent to the counsel of record is binding upon the client, and
the neglect or failure of counsel to inform him of an adverse judgment
resulting in the loss of his right to appeal is not a ground for setting aside
a judgment that is valid and regular on its face.5 This is based on the rule
that any act performed by a counsel within the scope of his general or
implied authority is regarded as an act of the client.6
In highly meritorious cases, however, the Court may depart from the
application of this rule such as when the negligence of the counsel is so
gross, reckless, and inexcusable that the client is deprived of due
process of law;7 when adherence to the general rule would result in the
outright deprivation of the clients property;8 or when the interests of
justice so require.9 In the case ofPeoples Homesite and Housing
Corporation v. Tiongco,10 the Court stated the reason therefor. Thus:
There should be no dispute regarding the doctrine that normally notice to
counsel is notice to parties, and that such doctrine has beneficient
effects upon the prompt dispensation of justice. Its application to a
given case, however, should be looked into and adopted, according
to the surrounding circumstances; otherwise, in the courts desire
to make a short cut of the proceedings, it might foster, wittingly or
unwittingly, dangerous collusions to the detriment of justice. It
would then be easy for one lawyer to sell ones right down the river, by
just alleging that he just forgot every process of the court affecting his
clients, because he was so busy. Under this circumstance, one should
not insist that a notice to such irresponsible lawyer is also a notice to his
clients.11
[Emphases Supplied]
Thus, though the Court is cognizant of the general rule, in cases of gross
and palpable negligence of counsel and of extrinsic fraud, the Court
must step in and accord relief to a client who suffered thereby.12 For
negligence to be excusable, it must be one which ordinary diligence and
prudence could not have guarded against,13 and for the extrinsic fraud to
justify a petition for relief from judgment, it must be that fraud which the
prevailing party caused to prevent the losing party from being heard on
his action or defense. Such fraud concerns not the judgment itself but
the manner in which it was obtained.14 Guided by these
pronouncements, the Court in the case of Apex Mining, Inc. vs. Court of
Appeals15 wrote:
If the incompetence, ignorance or inexperience of counsel is
so great and the error committed as a result thereof is so serious that
the client, who otherwise has a good cause, is prejudiced and denied his
day in court, thelitigation may be reopened to give the client another
chance to present his case. Similarly, when an unsuccessful party has
been prevented from fully and fairly presenting his case as a result of his
lawyers professional delinquency or infidelity the litigation may be
reopened to allow the party to present his side. Where counsel is guilty
of gross ignorance, negligence anddereliction of duty, which resulted
in the clients being held liable for damages in a damage suit, the client is
deprived of his day in court and the judgment may be set aside on
such ground.
[Emphases Supplied]
The situation in this case is almost similar to that in the recent case
of Lasala v. National Food Authority.16 In said case, the Court allowed the
petition for relief from judgment filed by the National Food Authority due
to its counsels repeated acts of negligence and employment of extrinsic
fraud to its detriment. The Court wrote:
Extrinsic fraud in a petition for annulment refers to any fraudulent act of
the prevailing party in litigation committed outside of the trial of the case,
where the defeated party is prevented from fully exhibiting his side by
fraud or deception practiced on him by his opponent, such as by keeping
status indicated that he relied solely on his counsel for the protection and
defense of his rights; and (2) the lawyers repeated acts of negligence in
handling the case showed that his inaction was deliberate.
In contrast, the Court ruled in Tan that the petitioners failure to file a
notice of appeal was partly his fault and not just his lawyers. Too, the
failure to file the notice of appeal was the only act of negligence
presented as extrinsic fraud.
We find the exceptional circumstances in Bayog to be present in the
case now before us.
The party in the present case, the NFA, is a government agency that
could rightly rely solely on its legal officers to vigilantly protect its
interests. The NFAs lawyers were not only its counsel, they were
its employees tasked to advance the agencys legal interests.
Further, the NFAs lawyers acted negligently several times in
handling the case that it appears deliberate on their part.
First, Atty. Mendoza caused the dismissal of the NFAs complaint
against Lasala by negligently and repeatedly failing to attend the
hearing for the presentation of the NFAs evidence-inchief.Consequently, the NFA lost its chance to recover from Lasala
the employee benefits that it allegedly shouldered as indirect
employer.
Atty. Mendoza never bothered to provide any valid excuse for this
crucial omission on his part. Parenthetically, this was not the first
time Atty. Mendoza prejudiced the NFA; he did the same when
he failed to file a motion for reconsideration and an appeal in a
court, thus entitling said clients to petition for relief from judgment
despite the lapse of the reglementary period for filing said period for filing
said petition.
Potential Liability of Atty. Baniaga
The records disclose that on January 27, 2011, the OGCC dismissed
Atty. Baniaga for Serious Dishonesty, Grave Misconduct, Gross Neglect
of Duty, Conduct Prejudicial to the Best Interest of the Service, and
Violation of Reasonable Office Rules and Regulations.27
The Court is forwarding a copy of the records of this case to the Board of
Governors of the Integrated Bar of the Philippines so it may conduct the
appropriate investigation regarding Atty. Baniagas fitness to remain as a
member of the Bar.
As in Lasala, the Courts ruling in this case involves solely the finding of
extrinsic fraud for the purpose of granting CEZA a relief from judgment.
The Board of Governors should conduct its own investigation regarding
the incidents surrounding this case with this decision and its records to
be considered as part of evidence to determine the potential liabilities of
Atty. Baniaga.
WHEREFORE, the petition is GRANTED. The August 13, 2010 and
December 9, 2010 Resolutions of the Court of Appeals, affirming the
March 4, 2010 Resolution of the Regional Trial Court, Branch 7, Aparri,
Cagayan , are SET ASIDE.
The Petition for Relief from Judgment filed by petitioner Cagayan
Economic Zone Authority is GRANTED. Accordingly, the Court of
Appeals is ordered to give due course to its Notice of Appeal.
Let copies of this decision and the relevant records of this case be sent
to the Board of Governors of the Integrated Bar of the Philippines for its
administrative investigation of Atty. Edgardo Baniaga, based on the
given facts of this decision to determine whether he has the requisite
competence and integrity to maintain his membership in the roll of
lawyers of this country.
SO ORDERED.
MENDOZA, J.:
Carpio, (Chairperson), Brion, Del Castillo, and Leonen, JJ., concur.